United States v. Sayyed

United States of America, Plaintiff-Appellee,v.Rafi Sayyed, Defendant-Appellant.

Argued
February 22, 2017

Appeal
from the United States District Court for the Northern
District of Illinois, Eastern Division. No. 11 CR 625-1 -
Gary Feinerman, Judge.

Before
Bauer and Williams, Circuit Judges, and DeGuilio, District
Judge. [*]

Williams, Circuit Judge.

Rafi
Sayyed was ordered to pay $940, 000 in mandatory restitution
to the American Hospital Association after pleading guilty to
mail fraud. The United States sought to collect part of the
restitution with approximately $327, 000 contained in
Sayyed's retirement accounts.

The
district court granted the government's motion for
turnover orders. On appeal, Sayyed maintains that the
district court erred in failing to find that his retirement
funds qualify as "earnings" subject to the 25%
garnishment cap under the Consumer Credit Protection Act. We
disagree. Because the garnishment cap only protects periodic
distributions pursuant to a retirement program and the
government may reach Sayyed's present interest in his
retirement funds, the district court properly granted the
government's turnover motion.

I.
BACKGROUND

From
2003 to 2006, while employed as Director of Application for
the American Hospital Association ("AHA"), Rafi
Sayyed directed overpriced contracts to companies in exchange
for kickbacks. For his crimes, Sayyed plead guilty to one
count of mail fraud, in violation of 18 U.S.C. § 1341,
was sentenced to three months' imprisonment and ordered
to make restitution payments to the AHA in the amount of
$940, 450.00, pursuant to the Mandatory Victims Restitution
Act. 18 U.S.C. § 3663A. As of November 20, 2015, Sayyed
still owed $650, 234.25.

In
post-conviction proceedings, the United States sought to
enforce the restitution judgment pursuant to 18 U.S.C. §
3613, which permits the government to enforce a restitution
judgment "in accordance with the practices and
procedures for the enforcement of a civil judgment." The
government served citations to The Vanguard Group
("Vanguard") and Aetna, Inc. ("Aetna") to
discover assets in Sayyed's retirement accounts. After
receiving answers, the government filed a motion for turnover
orders alleging that the companies possessed retirement
accounts with approximately $327, 000 in non-exempt funds
that could be used to satisfy the judgment. Sayyed responded
to the government's motion arguing that his retirement
accounts were exempt "earnings" subject to the 25%
garnishment cap of the Consumer Credit Protection Act (the
"CCPA").

The
district court granted the government's motion, finding
that because Sayyed, who was 48-years-old at the time, had
the right to withdraw the entirety of his accounts at will,
the funds were not "earnings" and so were not
exempt under the CCPA. The district court directed Vanguard
and Aetna to pay the Clerk of Court the liquidated value of
the funds and ordered the Clerk to reserve a portion of the
funds in escrow for the income tax consequences of the early
withdrawal.

II.
ANALYSIS

"The
district court's turnover order is a final judgment,
which we review de novo." Maker v. Harris Trust
& Sav. Bank,506 F.3d 560, 561 (7th Cir. 2007)
(quotation and citation omitted). We have previously held
that a district court may enforce restitution fines against a
defendant's retirement account, pursuant to 18 U.S.C.
§ 3613(a). See United States v. Lee, 659 F.3d
619, 621 (7th Cir. 2011); United States v. Hosking,567 F.3d 329, 335 (7th Cir. 2009). 18 U.S.C. § 3613(a)
states that "a judgment imposing a fine may be enforced
against all property or rights to property of the person
fined." However, enforcement is subject to Section 303
of the CCPA, which creates a garnishment ceiling of 25% of a
debtor's disposable earnings for a week. 18 U.S.C. §
3613(a)(3); see 15 U.S.C. § 1673(a)(1).

Sayyed
contends that the funds in his retirement accounts meet the
CCPA's definition of "earnings" and so are
subject to the 25% garnishment cap. Sayyed does not dispute
the district court's conclusion that he has a present
right to receive the entire balance of his retirement
accounts. Instead, he offers three arguments to assert that
the CCPA's garnishment cap applies to his retirement
accounts. First, he asserts that Lee,659 F.3d 619,
held all retirement funds are "earnings" subject to
the garnishment cap. He then argues that even if lump-sum
distributions from a retirement account are not subject to
the garnishment cap, the government must wait until he
reaches retirement age and elects a form of distribution
(i.e., lumpsum distribution or periodic payments)
before deciding whether the CCPA's garnishment cap
applies in his case. Finally, Sayyed contends that his
retirement funds meet the definition of "earnings"
because the accounts are funded directly by his earned wages.
These arguments fail for the reasons explained below.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A.
Not all retirement funds are ...

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